At the end of 2022, the Spanish real estate market was filled with doubts. With record levels of inflation, interest rates rising at a record pace for the last decades, the energy crisis and the projected economic recession, many experts justifiably believed that the Spanish real estate market was facing really difficult times.
Forecasts painted a picture of a serious trend reversal already in the first months of 2023, but, as we can see, the predictions did not come true. Therefore, making forecasts is always a thankless task. Anyway, the forecasts did not come true and now the market needs new ones. This time they are noticeably more optimistic, but it should be said right away that we are not talking about cloudless forecasts. Of course, this is not the case.
Although the dramatic fall did not happen, the fundamental characteristics of the market and external factors that determined the past forecasts have not gone away. Nevertheless, experts now have a better idea of how stable the Spanish real estate market is and, based on this, they are ready to adjust their predictions towards a more favorable development of events.
The price adjustment is still on the nose, the recession is still to come, even if not in the worst case scenario, there is still uncertainty and investment volumes are still declining. There are still enough large investors predicting difficult times for the market in the coming months.
Companies such as Arcana, BNP Paribas, Merlin, Colonial, La and Aedas Homes are thinking in this direction. This became known after the «V Iberian Conference on Real Estate Investments and Public Companies», which was held recently in Madrid. It was organized by the European Association of Public Companies of the Real Estate Market (EPRA).
But there are also encouraging opinions. Let's pay attention to the same Arcano Partners and its chief economist — Ignacio de la Torre. De la Torre pointed out directly that the time for the worst developments in the market has passed: inflation is already declining, wages are rising, the purchasing power of the population is increasing. Oil prices have also declined. They will grow in the coming months because of China, but this country, surprisingly, has set rather modest tasks for its economy. At least they are more modest than those that were expected.
The economist also expressed confidence that Europe will avoid a recession, although economic indicators will slow down. De la Torre, at the same time, predicted that interest rates will soon reach the ceiling and in the medium term will decrease in the eurozone to about 2.5%.
According to the economist, this means that structural interest rates, which are important for the real estate sector, will remain at a low level worldwide for the next 10-20 years. This will not change due to demographic trends.
Borja Ortega, CEO of BNP Paribas Real Estate in Spain, also delivered an optimistic message. He pointed out that now they, for the most part, are more positive than in November-December 2022. Against the background of such record growth in a gloomy economic situation, it is difficult not to be a pessimist. Especially if millions and billions are at stake. Ortega emphasizes that it is worth keeping calm in the current situation and looking at everything with a cold mind.
Ortega also pointed out that there will be a lot of activity in the real estate sector in 2023. Today, the Iberian Peninsula is in the field of view of international companies, investors and ordinary buyers due to factors such as competitive rental rates and prices in comparison with other European countries.
As for economic issues, Baroja Ortega predicted that Spain and Portugal will be able to avoid a recession this year, and the situation will develop noticeably better than expected. Nevertheless, it is predicted that the volume of investments in general will fall by almost 20% over the year. This is an even more pessimistic assessment than 2 months ago. But this is also logical, given that after a record growth at the end of last year, the market must at least to some extent adjust and stabilize.